Tom Moeller

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      The housing market is on the mend. <b>New home sales jumped 7.6% in May to 369,000 </b>following a 1.2% April
      decline. However, March sales were revised up. May sales beat consensus
      expectations for 346,000. A one-third rise (127.8% y/y) in sales in the
      Northeast to 41,000 led last month's improvement followed by the South's
      12.7% (16.6% y/y) gain to 204,000. Sales in both the Midwest, off 10.6%
      (+2.4% y/y), and the West, off 3.5% (+10.8% y/y), fell.</p>
      <p>The <b>median price</b> of a new single family
      home fell for the third straight month. The 0.6% m/m decline (+5.6% y/y)
      to $234,500, from a downwardly revised April, was to the lowest level
      since January. The average price fell 3.5% (+4.3% y/y) in May.</p>
      <p>The <b>length of time to sell a new home </b>held m/m at 7.9 months in
      May. The <b>inventory of unsold homes</b> remained near the all time low
      at 145,000 units (-14.2% y/y). This is a 4.7-month supply at the current
      sales rate.</p>
      <p>The data in this report are available in Haver's <b>USECON</b>
      database. The consensus expectation figure is from the Action Economics
      survey and is available in the <b>AS1REPNA</b> database.</p>
      
      <p><a href="/comment/120625f_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120625f.png"></a>
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            <th class="firstcol" scope="col" >U.S. New Home Sales</th>
            <th scope="col" >May</th>
            <th scope="col" >Apr</th>
            <th scope="col" >Mar</th>
            <th scope="col" >Y/Y %</th>
            <th scope="col" >2011</th>
            <th scope="col" >2010</th>
            <th scope="col" >2009</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >Total (SAAR, 000s)</td>
            <td  >369</td>
            <td  >343</td>
            <td  >347</td>
            <td  >19.8</td>
            <td  >307</td>
            <td  >321</td>
            <td  >374</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Northeast</td>
            <td  >41</td>
            <td  >30</td>
            <td  >27</td>
            <td  >127.8</td>
            <td  >21</td>
            <td  >31</td>
            <td  >31</td>
          </tr>
          <tr>
            <td class="firstcol" >Midwest</td>
            <td  >42</td>
            <td  >47</td>
            <td  >42</td>
            <td  >2.4</td>
            <td  >45</td>
            <td  >45</td>
            <td  >54</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >South</td>
            <td  >204</td>
            <td  >181</td>
            <td  >201</td>
            <td  >16.6</td>
            <td  >169</td>
            <td  >173</td>
            <td  >202</td>
          </tr>
          <tr>
            <td class="firstcol" >West</td>
            <td  >82</td>
            <td  >85</td>
            <td  >77</td>
            <td  >10.8</td>
            <td  >72</td>
            <td  >74</td>
            <td  >87</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Median Price (NSA, $)</td>
            <td  >234,500</td>
            <td  >236,000</td>
            <td  >239,500</td>
            <td  >5.6</td>
            <td  >224,317</td>
            <td  >221,242</td>
            <td  >214,500</td>
          </tr>
        </tbody>
      </table>
      </span>
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The housing market is on the mend. New home sales jumped 7.6% in May to 369,000 following a 1.2% April decline. However, March sales were revised up. May sales beat consensus expectations for 346,000. A one-third rise (127.8% y/y) in [...]

U.S. New Home Sales Improve; Prices Decline

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      The May National Activity Index (CFNAI) from the Chicago Federal Reserve dropped
      to -0.45 from a revised 0.08 in April, reported as 0.11 last month.
      Moreover,<b> the three-month moving deteriorated to -0.34, its lowest
      reading since June of last year.</b> During the last ten years there has
      been an 81% correlation between the Chicago Fed Index and the q/q change
      in real GDP.</p>
      <p>Month-to-month deterioration occurred primarily in the Production &amp;
      Income series which reversed its April improvement. The other index
      components were roughly flat m/m or slightly improved m/m. The Chicago Fed
      reported that thirty two of the 85 individual indicators made positive
      contributions to the index in May while 53 made negative contributions.</p>
      <p>The CFNAI is a weighted average of 85 indicators of national economic
      activity. It is constructed to have an average value of zero and a
      standard deviation of one. Since economic activity tends toward trend
      growth rate over time, a positive index reading corresponds to growth
      above trend and a negative index reading corresponds to growth below
      trend.</p>
      <p>The Chicago Federal Reserve figures are available in Haver's <b>SURVEYS</b>
      database.</p>
      
      <p><a href="/comment/120625b_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120625b.png"></a>
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            <th class="firstcol" scope="col" width="586"><b><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago
              Federal Reserve Bank</a></b></th>
            <th scope="col" ><b>May</b></th>
            <th scope="col" ><b>Apr</b></th>
            <th scope="col" ><b>Mar</b></th>
            <th scope="col" ><b>May'11</b></th>
            <th scope="col" ><b>2011</b></th>
            <th scope="col" ><b>2010</b></th>
            <th scope="col" ><b>2009</b></th>
          </tr>
        </thead>
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          <tr>
            <td class="firstcol" width="586">CFNAI</td>
            <td  >-0.45</td>
            <td  >0.08</td>
            <td  >-0.64</td>
            <td  >-0.25</td>
            <td  >-0.06</td>
            <td  >0.00</td>
            <td  >-1.62</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="586">&nbsp;3-Month Moving Average</td>
            <td  >-0.34</td>
            <td  >-0.13</td>
            <td  >-0.05</td>
            <td  >-0.19</td>
            <td  >--</td>
            <td  >--</td>
            <td  >--</td>
          </tr>
          <tr>
            <td class="firstcol" width="586">&nbsp;&nbsp;Personal Consumption
              &amp; Housing</td>
            <td  >-0.25</td>
            <td  >-0.24</td>
            <td  >-0.26</td>
            <td  >-0.36</td>
            <td  >-0.32</td>
            <td  >-0.32</td>
            <td  >-0.36</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="586">&nbsp;&nbsp;Employment,
              Unemployment &amp; Hours</td>
            <td  >0.00</td>
            <td  >-0.13</td>
            <td  >0.13</td>
            <td  >0.02</td>
            <td  >0.12</td>
            <td  >0.04</td>
            <td  >-0.82</td>
          </tr>
          <tr>
            <td class="firstcol" width="586">&nbsp;&nbsp;Production &amp; Income</td>
            <td  >-0.20</td>
            <td  >0.42</td>
            <td  >-0.39</td>
            <td  >0.09</td>
            <td  >0.09</td>
            <td  >0.22</td>
            <td  >-0.27</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="586">&nbsp;&nbsp;Sales, Orders &amp;
              Inventories</td>
            <td  >0.00</td>
            <td  >0.02</td>
            <td  >-0.12</td>
            <td  >-0.17</td>
            <td  >0.04</td>
            <td  >0.07</td>
            <td  >-0.16</td>
          </tr>
        </tbody>
      </table>
      </span>
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The May National Activity Index (CFNAI) from the Chicago Federal Reserve dropped to -0.45 from a revised 0.08 in April, reported as 0.11 last month. Moreover, the three-month moving deteriorated to -0.34, its lowest reading since June [...]

U.S. Chicago Fed Index Is Negative Again

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      <p><span id="byline">Economic momentum waned further last month.</span><span id="articletext">
      The May National Activity Index (CFNAI) from the Chicago Federal Reserve
      to -0.45 from a revised 0.08 in April, last month reported as 0.11.
      Moreover,<b> the three-month moving deteriorated to -0.34, its lowest
      reading since June of last year.</b> During the last ten years there has
      been an 81% correlation between the Chicago Fed Index and the q/q change
      in real GDP
      <p>Month-to-month deterioration occurred primarily in the Production &amp;
      Income series which reversed its April improvement. The other index
      components were roughly flat m/m or slightly improved m/m. The Chicago Fed
      reported that thirty two of the 85 individual indicators made positive
      contributions to the index in May while 53 made negative contributions.</p>
      <p>The CFNAI is a weighted average of 85 indicators of national economic
      activity. It is constructed to have an average value of zero and a
      standard deviation of one. Since economic activity tends toward trend
      growth rate over time, a positive index reading corresponds to growth
      above trend and a negative index reading corresponds to growth below
      trend.</p>
      <p>The Chicago Federal Reserve figures are available in Haver's <b>SURVEYS</b>
      database.</p>
      <table class="centered" border="0" cellSpacing="0" width="1231">
        <thead>
          <tr>
            <th class="firstcol" scope="col" width="586"><b><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago
              Federal Reserve Bank</a></b></th>
            <th scope="col" width="91"><b>May</b></th>
            <th scope="col" width="91"><b>Apr</b></th>
            <th scope="col" width="91"><b>Mar</b></th>
            <th scope="col" width="92"><b>May'11</b></th>
            <th scope="col" width="92"><b>2011</b></th>
            <th scope="col" width="92"><b>2010</b></th>
            <th scope="col" width="92"><b>2009</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" width="586">CFNAI</td>
            <td align="center" width="91">-0.45</td>
            <td align="center" width="91">0.08</td>
            <td align="center" width="91">-0.64</td>
            <td align="center" width="92">-0.25</td>
            <td align="center" width="92">-0.06</td>
            <td align="center" width="92">0.00</td>
            <td align="center" width="92">-1.62</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="586">&nbsp;3-Month Moving Average</td>
            <td align="center" width="91">-0.34</td>
            <td align="center" width="91">-0.13</td>
            <td align="center" width="91">-0.05</td>
            <td align="center" width="92">-0.19</td>
            <td align="center" width="92">--</td>
            <td align="center" width="92">--</td>
            <td align="center" width="92">--</td>
          </tr>
          <tr>
            <td class="firstcol" width="586">&nbsp;&nbsp;Personal Consumption
              &amp; Housing</td>
            <td align="center" width="91">-0.25</td>
            <td align="center" width="91">-0.24</td>
            <td align="center" width="91">-0.26</td>
            <td align="center" width="92">-0.36</td>
            <td align="center" width="92">-0.32</td>
            <td align="center" width="92">-0.32</td>
            <td align="center" width="92">-0.36</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="586">&nbsp;&nbsp;Employment,
              Unemployment &amp; Hours</td>
            <td align="center" width="91">0.00</td>
            <td align="center" width="91">-0.13</td>
            <td align="center" width="91">0.13</td>
            <td align="center" width="92">0.02</td>
            <td align="center" width="92">0.12</td>
            <td align="center" width="92">0.04</td>
            <td align="center" width="92">-0.82</td>
          </tr>
          <tr>
            <td class="firstcol" width="586">&nbsp;&nbsp;Production &amp; Income</td>
            <td align="center" width="91">-0.20</td>
            <td align="center" width="91">0.42</td>
            <td align="center" width="91">-0.39</td>
            <td align="center" width="92">0.09</td>
            <td align="center" width="92">0.09</td>
            <td align="center" width="92">0.22</td>
            <td align="center" width="92">-0.27</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="586">&nbsp;&nbsp;Sales, Orders &amp;
              Inventories</td>
            <td align="center" width="91">0.00</td>
            <td align="center" width="91">0.02</td>
            <td align="center" width="91">-0.12</td>
            <td align="center" width="92">-0.17</td>
            <td align="center" width="92">0.04</td>
            <td align="center" width="92">0.07</td>
            <td align="center" width="92">-0.16</td>
          </tr>
        </tbody>
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      <span id="articletitle">U.S. New Home Sales Improve; Prices Decline</span><br>
      <span id="byline">by &nbsp;</span><span id="byline0"><a href="http://www.haver.com/comment/Moeller.html">Tom
      Moeller</a>&nbsp; </span><span id="byline">June 25, 2012</span>
      <p><span id="byline">The housing market is on the mend.</span> <span id="articletext"><b>New
      home sales jumped 7.6% in May to 369,000 </b>following a 1.2% April
      decline. However, March sales were revised up. May sales beat consensus
      expectations for 346,000. A one-third rise (127.8% y/y) in sales in the
      Northeast to 41,000 led last month's improvement followed by the South's
      12.7% (16.6% y/y) gain to 204,000. Sales in both the Midwest, off 10.6%
      (+2.4% y/y), and the West, off 3.5% (+10.8% y/y), fell.</span></p>
      <p><span id="articletext">The <b>median price</b> of a new single family
      home fell for the third straight month. The 0.6% m/m decline (+5.6% y/y)
      to $234,500, from a downwardly revised April, was to the lowest level
      since January. The average price fell 3.5% (+4.3% y/y) in May.
      <p>The <b>length of time to sell a new home </b>held m/m at 7.9 months in
      May. The <b>inventory of unsold homes</b> remained near the all time low
      at 145,000 units (-14.2% y/y). This is a 4.7-month supply at the current
      sales rate.</p>
      <p>The data in this report are available in Haver's <b>USECON</b>
      database. The consensus expectation figure is from the Action Economics
      survey and is available in the <b>AS1REPNA</b> database.</p>
      <table class="centered" border="0" cellSpacing="0" width="1231">
        <thead>
          <tr>
            <th class="firstcol" scope="col" width="363">U.S. New Home Sales</th>
            <th scope="col" width="123">May</th>
            <th scope="col" width="123">Apr</th>
            <th scope="col" width="123">Mar</th>
            <th scope="col" width="123">Y/Y %</th>
            <th scope="col" width="124">2011</th>
            <th scope="col" width="124">2010</th>
            <th scope="col" width="124">2009</th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" width="363">Total (SAAR, 000s)</td>
            <td align="center" width="123">369</td>
            <td align="center" width="123">343</td>
            <td align="center" width="123">347</td>
            <td align="center" width="123">19.8</td>
            <td align="center" width="124">307</td>
            <td align="center" width="124">321</td>
            <td align="center" width="124">374</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="363">Northeast</td>
            <td align="center" width="123">41</td>
            <td align="center" width="123">30</td>
            <td align="center" width="123">27</td>
            <td align="center" width="123">127.8</td>
            <td align="center" width="124">21</td>
            <td align="center" width="124">31</td>
            <td align="center" width="124">31</td>
          </tr>
          <tr>
            <td class="firstcol" width="363">Midwest</td>
            <td align="center" width="123">42</td>
            <td align="center" width="123">47</td>
            <td align="center" width="123">42</td>
            <td align="center" width="123">2.4</td>
            <td align="center" width="124">45</td>
            <td align="center" width="124">45</td>
            <td align="center" width="124">54</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="363">South</td>
            <td align="center" width="123">204</td>
            <td align="center" width="123">181</td>
            <td align="center" width="123">201</td>
            <td align="center" width="123">16.6</td>
            <td align="center" width="124">169</td>
            <td align="center" width="124">173</td>
            <td align="center" width="124">202</td>
          </tr>
          <tr>
            <td class="firstcol" width="363">West</td>
            <td align="center" width="123">82</td>
            <td align="center" width="123">85</td>
            <td align="center" width="123">77</td>
            <td align="center" width="123">10.8</td>
            <td align="center" width="124">72</td>
            <td align="center" width="124">74</td>
            <td align="center" width="124">87</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" width="363">Median Price (NSA, $)</td>
            <td align="center" width="123">234,500</td>
            <td align="center" width="123">236,000</td>
            <td align="center" width="123">239,500</td>
            <td align="center" width="123">5.6</td>
            <td align="center" width="124">224,317</td>
            <td align="center" width="124">221,242</td>
            <td align="center" width="124">214,500</td>
          </tr>
        </tbody>
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The May National Activity Index (CFNAI) from the Chicago Federal Reserve to -0.45 from a revised 0.08 in April, last month reported as 0.11. Moreover, the three-month moving deteriorated to -0.34, its lowest reading since June of last [...]

Robert Brusca

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      <p><a href="/comment/120622a_big.png" name="modal"><img class="large" align="left" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120622a.png"></a>
      Italy's consumer confidence looks like it is about plunge right off the chart. The confidence measure has dropped 
      by over one point in June and is at a new all-time low. </p>
      <p>And as we peruse the components they are disaster-struck. The relative BEST reading is the overall situation for 
      the past 12-months at -35 which is positioned in the 68th percentile of its historic queue. That is a surprisingly 
      high standing for such a deeply negative number. Moreover, the past 12-months have been no picnic and for that 
      reading to score as the top 32% (top third) of the queue for the Italian consumer says something about how Italians 
      now view the future. </p> 
      <p><b>Never on a Sunday, or Monday, or Tuesday...</b>Indeed, the overall situation for the next 12-months has a raw 
      score of -32 which leaves it in the bottom 0.3% of its historic queue (yes, that's the bottom one-third of 
      one-percent, not a typo). One of the worst values ever. Unemployment prospects are in the 99.5 percentile of 
      their historic queue. Higher unemployment is seen as about as certain as ever. The household budget, looking ahead, 
      is the worst ever. Worst ever...</p> 
      <p>The household financial situation over the last 12-months is scored as a bottom 9% standing while the next 
      12-months score as a bottom 1.4% standing. Terrible readings all.  </p> 
      <p>The savings readings are somewhat odd and at the same time telling. Italians say it is a good time to save with 
      a score that is in the top 10% of its all-time range. Well if times are so bad, how can they be so bad if households 
      can save? The answer is in the <i>outlook for savings</i> which stands in the bottom 5.5% of its historic range. 
      Basically it looks like Italians are so freaked out they feel they have to save now because they will not be able 
      to save in the future. The financial environment has been very bad; it is going to get worse. The Italian consumers 
      have NO ILLUSIONS about the future. There will be no Dolce Vida. Some may fear for their simple 'Vida'.</p> 
      <p><b>Cold hard facts no denial...</b>This survey says the Italians see the cold hard facts du jour. But for now, 
      Italy's politicians are still trying to dodge biting the bullet but the people seem to have gotten the message. 
      I don't doubt that it is a bad time to be an Italian politician, technocrat or otherwise. But the hand writing 
      is on the wall. Greece is in the gutter, Spain's banks are all dressed up with nowhere to go and still being 
      coddled by a stress test that hardly looks any more realistic that the pabulum from the past. </p> 
      <p>If you wanted to update Grimm's Fairy Tales, you could add a couple of chapters on the stress test assessments 
      done in Europe since the financial crisis. There has been no greater fantasy. Italians KNOW their banks are not in 
      good shape either, but they have not been making headline recently. </p> 
      <p>The final element for Italian confidence is the current index which stands at a -46 and at that is only in the 
      bottom 25% of its historic queue. </p> 
      <p>Cleary Italy is challenged and troubled. Its people 'get it.'  Its politicians are either in denial or simply 
      do not know what to do next. Certainly all the posturing in Greece and Spain suggests Europe is still very much involved in using Kabuki to make policy. That does not give the right signals to Italy or to others to solve their current problems.</p> 
      <p>There is one very important reason to stop fooling around. Fooling around does not help Greece or Spain to make the hard choices they must make. And it sends the wrong signal to others who have their own bullets to bite. Europe has frittered away a lot of its time and lost flexibility. The Italian consumer can sense it.</p> 
      <p><b>Elsewhere in the Zone...</b>My sense is that today's IFO for Germany which showed expectations plunge as current conditions improved is not exactly a view of reality for Germany; Germany is in a different space from Italy, for sure. Non-Zoner Switzerland IMPROVED its growth outlook. But these are not isolated economies they are only partly insulated from these events in the Zone. The knock-on effects are in train. Germany's exposure to losses though its backing of the ECB and the LTRO loans it made and through the target2 balances at the ECB (only a problem if the euro breaks up!) cannot be dismissed and should not be downplayed. Germany has much more skin in the game' than it might seem.</p> 
      <p>Everyone can understand German resistance to giving everyone else a 'fourth second-chance'. The 'debtors' must do more. It's not about hitting fiscal targets as much as plugging holes and collecting taxes and getting rid of stupid work rules and excessive pay and vacation promises – especially to the all-too-insulated 'public servants.' No one can hit fiscal targets when the economic bottom falls out. But there are things that can be done to buy, to earn, to demonstrate credibility and the Mediterranean countries need to do those things NOW - right NOW. The Germans need to decide if they want to be a member of this club or not. Being a member implies responsibility and yes for your neighbor, too. It's not just keeping your own lawn cut and weed free. The German fiscal idea that divides Europe into a 'Japanese lunch box' with everyone minding his own budget surplus in his own little walled off cubicle is not much of a united Europe is it?  That plan needs to see the cold hard light of reality. As a friend of mine says: it's time to take the bull by the tail and look the situation right in the eye. </p> 
          
      
      <p><a href="/comment/120621h_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621h.png"></a>
      <a href="/comment/120621i_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621i.png"></a></p>
          
	
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
		<thead>
          	    <th scope="col" colspan=8>Italy ISAE Consumer Confidence</th>
  
  </thead>
  
    
      <td class="firstcol">&nbsp;</td>
      <td colspan=4>&nbsp;</td>
      Since 1993
      Rank
    
    
      <td class="firstcol">&nbsp;</td>
      Jun-12
      May-12
      Apr-12
      Mar-12
      %ile
      Rank
      %ile
    
    <tr>
      <td class="firstcol">Consumer Confidence</td>
      <td>85.3</td>
      <td>86.5</td>
      <td>88.8</td>
      <td>96.1</td>
      <td>0.0</td>
      <td>365</td>
      <td>0.0%</td>
    </tr>
    
      Last 12 Months
    
    <tr>
      <td class="firstcol">OVERALL SITUATION</td>
      <td>-35</td>
      <td>-36</td>
      <td>-42</td>
      <td>-43</td>
      <td>75.7</td>
      <td>116</td>
      <td>68.2%</td>
    </tr>
    
      Next 12 Months
    
    <tr>
      <td class="firstcol">OVERALL SITUATION</td>
      <td>-32</td>
      <td>-25</td>
      <td>-27</td>
      <td>-20</td>
      <td>0.0</td>
      <td>364</td>
      <td>0.3%</td>
    </tr>
    <tr>
      <td class="firstcol">UNEMPLOYMENT</td>
      <td>35</td>
      <td>32</td>
      <td>30</td>
      <td>23</td>
      <td>93.8</td>
      <td>2</td>
      <td>99.5%</td>
    </tr>
    <tr>
      <td class="firstcol">HOUSEHOLD BUDGET</td>
      <td>-9</td>
      <td>-7</td>
      <td>-6</td>
      <td>0</td>
      <td>0.0</td>
      <td>365</td>
      <td>0.0%</td>
    </tr>
    
      HOUSEHOLD FIN SITUATION
    
    <tr>
      <td class="firstcol">Last 12 months</td>
      <td>-42</td>
      <td>-41</td>
      <td>-42</td>
      <td>-36</td>
      <td>20.4</td>
      <td>332</td>
      <td>9.0%</td>
    </tr>
    <tr>
      <td class="firstcol">Next12 months</td>
      <td>-27</td>
      <td>-25</td>
      <td>-28</td>
      <td>-15</td>
      <td>16.3</td>
      <td>360</td>
      <td>1.4%</td>
    </tr>
    
      HOUSEHOLD SAVINGS
    
    <tr>
      <td class="firstcol">Current</td>
      <td>60</td>
      <td>62</td>
      <td>59</td>
      <td>60</td>
      <td>72.6</td>
      <td>35</td>
      <td>90.4%</td>
    </tr>
    <tr>
      <td class="firstcol">Future</td>
      <td>-37</td>
      <td>-41</td>
      <td>-43</td>
      <td>-35</td>
      <td>23.4</td>
      <td>345</td>
      <td>5.5%</td>
    </tr>
    
      MAJOR Purchases
    
    <tr>
      <td class="firstcol">Current</td>
      <td>-46</td>
      <td>-45</td>
      <td>-50</td>
      <td>-42</td>
      <td>26.9</td>
      <td>273</td>
      <td>25.2%</td>
    </tr>
    
      <td class="firstcol">&nbsp;</td>
      Total number of months: 365
      Back to Feb-82
      <td>&nbsp;</td>
    

  


</html>

Italy's consumer confidence looks like it is about plunge right off the chart. The confidence measure has dropped by over one point in June and is at a new all-time low. And as we peruse the components they are disaster-struck. The [...]

Terrible Consumer Sentiment in Italy.....The Movie: Halloween, Italian Style Without Jaime Lee Curtis

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      <p></p>
      
      <p><a href="/comment/120622b_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120622b.png"></a>
      <a href="/comment/120622c_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120622c.png"></a></p>
      
      <p>The U.S. House Price Index from the Federal Housing and Finance Agency
      (FHFA) rose 0.8% during April following a 1.6% March jump. It was the
      third consecutive monthly gain and lifted the y/y increase to 3.0%. That
      gain followed four successive years of price decline. Price gains during
      the last year were across-the-board except in New England and the Middle
      Atlantic regions. Despite the improvement, prices on average were 17.6%
      below the 2007 high. FHFA uses data provided by Fannie Mae and Freddie Mac
      and is not value-weighted.</p>
      <p>The HPI is calculated using a repeat sales index. That means that the
      HPI measures changes in the price of the same property over time but does
      not measure changes in property types over time. So if, for example, the
      price of a larger, new home was not growing very rapidly, but the number
      of people transitioning from smaller homes to larger homes greatly
      increased, median house prices would go up (people buying more expensive
      houses) much more than the HPI. In this way, the HPI is a better measure
      of how any particular home is appreciating while the median house price is
      a better measure of what the typical home buyer is paying.</p>
      <p>The FHFA data is available in Haver's <b>USECON</b> database.</p>
      
      <p><a href="/comment/120625d_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120625d.png"></a>
      <a href="/comment/120622e_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120622e.png"></a></p>
          
	<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
		<thead>
          	<tr>
            <th class="firstcol" scope="col" ><b>FHFA U.S. House
              Price Index Purchase Only (SA %)</b></th>
            <th scope="col" ><b>Apr</b></th>
            <th scope="col" ><b>Mar</b></th>
            <th scope="col" ><b>Feb</b></th>
            <th scope="col" ><b>Y/Y</b></th>
            <th scope="col" ><b>2011</b></th>
            <th scope="col" ><b>2010</b></th>
            <th scope="col" ><b>2009</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" ><b>Total</b></td>
            <td>0.8</td>
            <td>1.6</td>
            <td>0.3</td>
            <td>3.0</td>
            <td>-4.2</td>
            <td>-2.8</td>
            <td>-5.1</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp; New England</td>
            <td>-1.2</td>
            <td>0.7</td>
            <td>0.3</td>
            <td>-2.6</td>
            <td>-2.1</td>
            <td>-2.0</td>
            <td>-2.5</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp; Middle Atlantic</td>
            <td>0.1</td>
            <td>1.3</td>
            <td>-0.9</td>
            <td>-0.9</td>
            <td>-3.3</td>
            <td>-1.1</td>
            <td>-3.0</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp; East North Central</td>
            <td>0.7</td>
            <td>2.5</td>
            <td>-0.3</td>
            <td>3.2</td>
            <td>-3.8</td>
            <td>-3.1</td>
            <td>-3.6</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp; West North Central</td>
            <td>-0.3</td>
            <td>1.0</td>
            <td>-1.0</td>
            <td>2.7</td>
            <td>-3.5</td>
            <td>-1.9</td>
            <td>-1.4</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp; South Atlantic</td>
            <td>1.2</td>
            <td>0.4</td>
            <td>1.2</td>
            <td>4.2</td>
            <td>-5.3</td>
            <td>-4.9</td>
            <td>-7.5</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp; East South Central</td>
            <td>-0.4</td>
            <td>3.1</td>
            <td>0.8</td>
            <td>3.7</td>
            <td>-2.8</td>
            <td>-2.7</td>
            <td>-2.1</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp; West South Central</td>
            <td>1.2</td>
            <td>0.9</td>
            <td>1.9</td>
            <td>4.1</td>
            <td>-1.1</td>
            <td>-0.3</td>
            <td>-0.0</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp; Mountain</td>
            <td>1.9</td>
            <td>1.3</td>
            <td>1.8</td>
            <td>6.5</td>
            <td>-6.8</td>
            <td>-6.4</td>
            <td>-10.9</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp; Pacific</td>
            <td>2.2</td>
            <td>2.8</td>
            <td>-1.2</td>
            <td>2.6</td>
            <td>-7.2</td>
            <td>-2.2</td>
            <td>-11.1</td>
          </tr>
        </tbody>
      </table>
      </span>
</body></html>

The U.S. House Price Index from the Federal Housing and Finance Agency (FHFA) rose 0.8% during April following a 1.6% March jump. It was the third consecutive monthly gain and lifted the y/y increase to 3.0%. That gain followed four [...]

FHFA Home Price Index Improves Again

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      <p><a href="/comment/120621p_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621p.png"></a>
      <a href="/comment/120621o_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621o.png"></a></p>
      
      <p>The Leading Economic Indicator index from the Conference Board rose 0.3%
      last month after an unrevised 0.1% slip during April. A 0.1% increase had
      been expected. An improved 70% of the component series rose last month. That
      remained up versus last September when just 25% gained. Higher building
      permits and a steeper interest yield curve had the most meaningful
      positive effects on the overall leading index last month. These were
      followed by a higher ISM orders series, higher capital goods orders and
      lower claims for jobless insurance. The separate Leading Credit Index
      slipped to its lowest level this year and indicated tighter conditions
      versus the easy state of last summer and fall.</p>
      <p>The index of coincident indicators rose 0.2% for a second month as higher
      manufacturing &amp; trade sales led the gain with improved personal income
      and higher employment. Industrial output fell for the second month in the
      last three.</p>
      <p>The index of lagging indicators rose 0.3% due mostly to higher C&amp;I
      loans outstanding.</p>
      <p>Another leading economic series is the ratio of coincident-to-lagging
      indicators. It measures how the economy is performing versus its excesses
      and it's been falling since January of last year.</p>
      <p>The Conference Board figures are available in Haver's <b>BCI</b>
      database; the components are available there, and most are also in <b>USECON</b>.
      The forecast figure for the Consensus are in the <b>AS1REPNA</b> database.
      Visit the Conference Board's <a href="http://www.conference-board.org/">site</a>
      for coverage of leading indicator series from around the world.</p>
      
      <p><a href="/comment/120621n_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621n.png"></a>
      <a href="/comment/120621q_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621q.png"></a></p>
          
	<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
		<thead>
          	<tr>
            <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM"><b>Business
              Cycle Indicators (%)</b></a></th>
            <th scope="col" ><b>May</b></th>
            <th scope="col" ><b>Apr</b></th>
            <th scope="col" ><b>Mar</b></th>
            <th scope="col" ><b>Y/Y</b></th>
            <th scope="col" ><b>2011</b></th>
            <th scope="col" ><b>2010</b></th>
            <th scope="col" ><b>2009</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" >Leading</td>
            <td>0.3</td>
            <td>-0.1</td>
            <td>0.2</td>
            <td>1.7</td>
            <td>5.2</td>
            <td>7.6</td>
            <td>-12.8</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Coincident</td>
            <td>0.2</td>
            <td>0.2</td>
            <td>0.0</td>
            <td>3.1</td>
            <td>2.8</td>
            <td>2.5</td>
            <td>-7.7</td>
          </tr>
          <tr>
            <td class="firstcol" >Lagging</td>
            <td>0.3</td>
            <td>0.6</td>
            <td>0.3</td>
            <td>3.7</td>
            <td>1.8</td>
            <td>-2.9</td>
            <td>-1.0</td>
          </tr>
        </tbody>
      </table>
     </span>
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The Leading Economic Indicator index from the Conference Board rose 0.3% last month after an unrevised 0.1% slip during April. A 0.1% increase had been expected. An improved 70% of the component series rose last month. That remained [...]

U.S. Leading Indicators Improve

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      <p><a href="/comment/120621j_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621j.png"></a>
      <a href="/comment/120621k_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621k.png"></a></p>
      
      <p><b>Sales of existing homes slipped 1.5% last month to a 4.550 annual
      rate (9.6% y/y) </b>from an unrevised 4.620M during April. Sales of
      existing single-family homes alone fell 1.0% to 4.050M, up 10.4% y/y.
      (These data have a longer history than the total sales series). Sales of
      condos and co-ops fell 5.7% m/m to 0.500M, up 4.2% y/y.</p>
      <p>Home prices have firmed with the rebound in sales. The <b>median price
      of an existing home </b>rose 5.1% (7.9% y/y) to $182,600. The m/m rise
      roughly matched that of the prior two months. In the Northeast, the median
      sales price of $250,700 was up 3.8% y/y. In the West, the median price
      rose 13.4% y/y to $233,900. In the South, the price of $159,700 was up 7.8%
      y/y and in the Midwest the price rose 6.4% y/y to $147,700.</p>
      <p>The <b>months' supply</b> of homes on the market ticked up to 6.6 but
      still was near the lowest since March, 2006. The months' supply of
      single-family homes on the market rose to 6.5 but for condos &amp; coops
      it fell to 6.7. The total number of homes on the market slipped 0.4% and
      was down 20.4% y/y. Inventories of single-family homes fell 18.5% y/y
      while inventories of multi-family homes were off nearly one-third.</p>
      <p>Reported earlier this month, the composite index of <b>home price
      affordability</b> rose 0.9% y/y in April but it's been down sharply in the
      last two months with the rise in home prices. Mortgage payments as a
      percent of income rose m/m to 13.4% versus the high of roughly 25% in
      2006. The average monthly mortgage rate held at 4.04%.</p>
      <p>The data on existing home sales, prices and affordability can be found
      in Haver's <b>USECON</b> database. The regional price, affordability and
      inventory data are available in the <b>REALTOR </b>database. The
      expectations figure is in the <b>AS1REPNA </b>database.</p>
      
      <p><a href="/comment/120621l_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621l.png"></a>
      <a href="/comment/120621m_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621m.png"></a></p>
          
	<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
		<thead>
          	<tr>
            <th class="firstcol" scope="col" ><b>Existing Home Sales
              (Thous, SAAR)</b></th>
            <th scope="col" ><b>May</b></th>
            <th scope="col" ><b>Apr</b></th>
            <th scope="col" ><b>Mar</b></th>
            <th scope="col" ><b>Y/Y%</b></th>
            <th scope="col" ><b>2011</b></th>
            <th scope="col" ><b>2010</b></th>
            <th scope="col" ><b>2009</b></th>
          </tr>
        </thead>
        <tbody>
          <tr>
            <td class="firstcol" ><b>Total</b></td>
            <td>4,550</td>
            <td>4,620</td>
            <td>4,470</td>
            <td>9.6</td>
            <td>4,283</td>
            <td>4,181</td>
            <td>4,329</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;Northeast</td>
            <td>590</td>
            <td>620</td>
            <td>590</td>
            <td>7.3</td>
            <td>544</td>
            <td>563</td>
            <td>580</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;Midwest</td>
            <td>1,040</td>
            <td>1,030</td>
            <td>1,020</td>
            <td>19.5</td>
            <td>920</td>
            <td>908</td>
            <td>975</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >&nbsp;South</td>
            <td>1,780</td>
            <td>1,790</td>
            <td>1,730</td>
            <td>9.2</td>
            <td>1,685</td>
            <td>1,626</td>
            <td>1,640</td>
          </tr>
          <tr>
            <td class="firstcol" >&nbsp;West</td>
            <td>1,140</td>
            <td>1,180</td>
            <td>1,130</td>
            <td>3.6</td>
            <td>1,133</td>
            <td>1,083</td>
            <td>1,134</td>
          </tr>
          <tr class="odd">
            <td class="firstcol" >Single-Family Sales</td>
            <td>4,050</td>
            <td>4,090</td>
            <td>3,970</td>
            <td>10.4</td>
            <td>3,797</td>
            <td>3,704</td>
            <td>3,868</td>
          </tr>
          <tr>
            <td class="firstcol" >Median Price, Total, ($, NSA)</td>
            <td>182,600</td>
            <td>173,700</td>
            <td>164,800</td>
            <td>7.9</td>
            <td>164,542</td>
            <td>172,442</td>
            <td>172,783</td>
          </tr>
        </tbody>
      </table>
      </span>
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Sales of existing homes slipped 1.5% last month to a 4.550 annual rate (9.6% y/y) from an unrevised 4.620M during April. Sales of existing single-family homes alone fell 1.0% to 4.050M, up 10.4% y/y. (These data have a longer history [...]

U.S. Existing Home Sales Slip But Prices Rebound Further

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      <p><a href="/comment/120621f_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621f.png"></a>
      <a href="/comment/120621g_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621g.png"></a></p>
      
            <p>Another sign of economic weakening came today from the
            Philadelphia Federal Reserve Bank. Its General Business Conditions
            Index fell sharply this month to -16.6 from an unrevised -5.8 in May
            and compared to an expected 0.5. The figure was the second
            consecutive negative reading and the most negative since August. <b>Haver
            Analytics constructs a seasonally adjusted figure comparable to the
            ISM index. It slumped more than five points to 43.1, its lowest
            reading since July 2009.</b></p>
            <p>Declines in the component series were all inclusive except for
            the number of employees, which rose slightly to 1.8 but remained
            well below the April high of 17.9. During the last ten years there
            has been an 83% correlation between the employment index and the m/m
            change in factory sector payrolls. The sharpest component series
            declines were logged by shipments, orders, inventories and the
            length of the workweek. Lesser declines were unfilled orders and
            delivery times. </p>
            <p>Pricing power evaporated as the prices paid index dropped sharply
            into negative territory to its lowest level since July 2009.During
            the last ten years there has been a 70% correlation between the
            prices paid index and the three-month growth in the intermediate
            goods PPI.</p>
            <p>The separate index of expected business conditions in six months
            ticked up to 19.5 from its lowest since August of last year. New
            orders, shipments, employment and capital expenditures led the rise.
            </p>
            <p>The survey panel consists of 150 manufacturing companies in
            Federal Reserve District III (consisting of southeastern PA,
            southern NJ and Delaware.) The diffusion indexes represent the
            percentage of respondents indicating an increase minus the
            percentage indicating a decrease in activity. The figures from the
            Philadelphia Federal Reserve can be found in Haver's <b>SURVEYS</b>
            database. The Consensus expectations figure is available in <b>AS1REPNA</b>.</p>
      
      <p><a href="/comment/120621h_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621h.png"></a>
      <a href="/comment/120621i_big.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/120621i.png"></a></p>
          
	<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>
		<thead>
          	<tr>
                  <th class="firstcol" scope="col" ><b>Philadelphia
                    Fed (%)</b></th>
                  <th scope="col" ><b>Jun</b></th>
                  <th scope="col" ><b>May</b></th>
                  <th scope="col" ><b>Apr</b></th>
                  <th scope="col" ><b>Jun'11</b></th>
                  <th scope="col" ><b>2011</b></th>
                  <th scope="col" ><b>2010</b></th>
                  <th scope="col" ><b>2009</b></th>
                </tr>
              </thead>
              <tbody>
                <tr>
                  <td class="firstcol" >ISM-Adjusted General Business
                    Conditions</td>
                  <td>43.1</td>
                  <td>48.6</td>
                  <td>52.4</td>
                  <td>45.8</td>
                  <td>51.9</td>
                  <td>50.7</td>
                  <td>41.2</td>
                </tr>
                <tr class="odd">
                  <td class="firstcol" >General Business Conditions</td>
                  <td>-16.6</td>
                  <td>-5.8</td>
                  <td>8.5</td>
                  <td>-4.1</td>
                  <td>7.7</td>
                  <td>12.1</td>
                  <td>-7.6</td>
                </tr>
                <tr>
                  <td class="firstcol" >&nbsp;&nbsp;New Orders</td>
                  <td>-18.8</td>
                  <td>-1.2</td>
                  <td>2.7</td>
                  <td>-6.5</td>
                  <td>7.1</td>
                  <td>5.5</td>
                  <td>-9.5</td>
                </tr>
                <tr class="odd">
                  <td class="firstcol" >&nbsp;&nbsp;Shipments</td>
                  <td>-16.6</td>
                  <td>3.5</td>
                  <td>2.8</td>
                  <td>2.8</td>
                  <td>9.9</td>
                  <td>8.3</td>
                  <td>-7.9</td>
                </tr>
                <tr>
                  <td class="firstcol" >&nbsp;&nbsp;Unfilled Orders</td>
                  <td>-16.3</td>
                  <td>-9.4</td>
                  <td>3.2</td>
                  <td>-13.3</td>
                  <td>-0.9</td>
                  <td>-3.0</td>
                  <td>-15.2</td>
                </tr>
                <tr class="odd">
                  <td class="firstcol" >&nbsp;&nbsp;Delivery Time</td>
                  <td>-15.5</td>
                  <td>-14.0</td>
                  <td>-3.4</td>
                  <td>-14.9</td>
                  <td>-0.4</td>
                  <td>0.9</td>
                  <td>-15.2</td>
                </tr>
                <tr>
                  <td class="firstcol" >&nbsp;&nbsp;Inventories</td>
                  <td>-8.7</td>
                  <td>4.5</td>
                  <td>8.2</td>
                  <td>-10.4</td>
                  <td>-0.4</td>
                  <td>-5.0</td>
                  <td>-24.0</td>
                </tr>
                <tr class="odd">
                  <td class="firstcol" >&nbsp;&nbsp;Number of
                    Employees</td>
                  <td>1.8</td>
                  <td>-1.3</td>
                  <td>17.9</td>
                  <td>3.1</td>
                  <td>11.0</td>
                  <td>4.6</td>
                  <td>-23.8</td>
                </tr>
                <tr>
                  <td class="firstcol" >&nbsp;&nbsp;Prices Paid</td>
                  <td>-2.8</td>
                  <td>5.0</td>
                  <td>22.5</td>
                  <td>32.8</td>
                  <td>38.6</td>
                  <td>28.8</td>
                  <td>-3.6</td>
                </tr>
              </tbody>
            </table>
            </span>
</body></html>

Another sign of economic weakening came today from the Philadelphia Federal Reserve Bank. Its General Business Conditions Index fell sharply this month to -16.6 from an unrevised -5.8 in May and compared to an expected 0.5. The figure [...]

Philadelphia Fed Activity Index Slumps

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

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Andrew Cates

**Positive Growth Surprises, Negative Inflation Surprises—For Now**
The global macro backdrop heading into the latest Middle East shock was, by recent standards, relatively constructive. As the chart shows, growth data had been consistently surprising to the upside, while inflation surprises have been in negative territory—an unusually benign combination suggesting resilient activity alongside easing price pressures. What is striking, however, is that—at least through March and into early April—this pattern has not yet been meaningfully dislodged. For now, the data flow still reflects a world that was stabilising rather than deteriorating. That said, this is almost certainly a lagging signal. Supply-side shocks of this nature—particularly those centred on energy—tend to work with a delay but can be highly disruptive once they feed through. The risk, therefore, is that the current “goldilocks” surprise dynamic proves short-lived as higher energy costs, supply chain frictions and rising uncertainty begin to reshape the incoming data in the weeks ahead.

260409Z1.jpg

**Monetary Policy Expectations Shift as Easing Bets Are Repriced**
How policymakers respond to the evolving situation in the Middle East will be critical in shaping both market dynamics and the broader global outlook. This chart, based on the latest April Blue Chip Financial Forecasts survey, suggests that expectations are already beginning to shift. Forecasters are now less inclined to anticipate policy easing in the period ahead—particularly in the euro area, where expectations for rate cuts have been scaled back. Similarly, some of the easing previously priced for the Federal Reserve and the Bank of England has been pared back over the next 12 months. While this is not yet a full pivot toward tightening, it does point to a more cautious policy backdrop, reflecting the risk that renewed energy-driven inflation pressures could constrain central banks’ ability to support growth.

260409Z2.jpg

**Delay, Don’t Tighten: Central Banks’ Likely Playbook**
If the previous chart highlights a shift in policy expectations, this one gives a clearer sense of the reaction function underpinning it. When asked how central banks would respond if energy-driven inflation proves more persistent, most panellists point not to renewed tightening, but to a more cautious delay in easing. In other words, the hurdle for rate cuts has risen, even if the bar for  hikes remains relatively high. This distinction matters. It suggests that policymakers are likely to treat the shock as a supply-driven inflation impulse—one that complicates the outlook but does not automatically warrant aggressive tightening. At the same time, the responses underscore a second important theme: divergence. A sizeable share of forecasters expect policy paths to vary significantly across regions, reflecting differences in energy exposure, inflation dynamics and domestic growth conditions. Taken together, the message is one of constrained flexibility. Central banks may want to support growth, but persistent energy pressures could keep them on hold for longer than previously anticipated—reinforcing the more cautious policy outlook already evident in market pricing.

260409Z3.jpg

**Markets Signal Fiscal Concern, Not Inflation Panic**
If central banks are likely to proceed cautiously, financial markets are already beginning to draw their own conclusions. This chart shows that the recent adjustment in US Treasury markets has been driven primarily by a rise in real yields rather than a meaningful increase in inflation expectations. In other words, markets are not yet pricing a loss of monetary policy credibility or a sharp unanchoring of inflation expectations. Instead, the move points more toward concerns around the broader policy mix—particularly the fiscal backdrop and the potential for increased borrowing needs in an environment of heightened geopolitical risk. This distinction is important. A rise in inflation expectations would suggest fears of central banks falling behind the curve. What we are seeing instead is a repricing of real rates, consistent with tighter financial conditions and a higher risk premium. For now, at least, markets appear to view the shock less as a classic inflation spiral and more as a development that complicates the growth outlook and places greater strain on policy frameworks—especially on the fiscal side.

260409Z4.jpg

**Electricity Prices Reflect Energy Dependence**
The initial response in electricity markets since the Middle East disruption has followed a familiar pattern. Economies with greater domestic energy capacity—such as Scandinavia and, to a lesser extent, the US—have seen relatively contained electricity prices. By contrast, those more reliant on imported energy—most notably the UK and parts of Europe—continue to face significantly higher costs

260409Z5.jpg

**Generation Capacity Determines Energy Resilience**
These price dynamics are closely linked to underlying differences in electricity generation capacity. As the sixth chart shows, countries with higher per capita electricity production—again including Scandinavia and the US—are structurally better positioned to absorb external shocks. In contrast, economies with more limited domestic generation capacity, such as the UK and Germany, are inherently more exposed to fluctuations in global energy markets. This structural divide is likely to prove increasingly important in the period ahead, influencing not just near-term inflation outcomes but also the relative resilience of growth across economies as energy costs remain volatile.

260409Z6.jpg

Amid further tentative signs of de-escalation—most notably President Trump’s decision on April 7th to step back from further escalation—financial markets have stabilised somewhat, but the macroeconomic implications of the Middle East crisis remain highly uncertain. As our charts show, the global economy entered this shock from a position of relative strength, with positive growth surprises and easing inflation pressures still evident in the data (chart 1). However, that benign backdrop now looks vulnerable. Central banks are already reassessing the outlook, with expectations for policy easing being pared back (chart 2) and a growing consensus that any response to persistent energy-driven inflation will likely involve delaying cuts rather than tightening aggressively—albeit with significant regional divergence (chart 3). Financial markets, for their part, are not yet signalling a loss of inflation control, but the rise in real yields suggests increasing concern around the broader policy mix, particularly fiscal pressures (chart 4). Finally, the adjustment to the shock is unlikely to be uniform. Structural differences in domestic energy capacity are already driving wide divergences in electricity prices, leaving more import-dependent economies exposed to higher costs and sharper trade-offs between growth and inflation (charts 5 and 6). Taken together, the message is clear: even if geopolitical tensions ease, the economic aftershocks are likely to be uneven, persistent and increasingly shaped by structural constraints.

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Charts of the Week: From Oil Shock to Policy Dilemma

Michael J. Moran

260409A.jpg

260409B.jpg

This monthly report is always packed with information relating to the household sector. At this time, most observers will probably be most interested in price developments, and the results for February were a bit unsettling. The headline price index rose 0.4%, influenced by a jump of 0.8% in energy prices. This increase was largely anticipated and not especially troubling when viewed in isolation. Energy prices have shown little net change in the past two years, and the latest reading of the index was comfortably within the recent range of observations. However, given developments in the Middle East, energy prices undoubtedly will surge out of that recent range in the months ahead.

Core PCE prices also rose 0.4%, a touch firmer than the expected increase of 0.3%. An increase of 0.4% in core inflation is a quick pace even when viewed in Isolation, but this advance followed a similar increase in January, and the December reading almost rounded to 0.4%. These recent changes pulled the year-over-year increase in core prices to 3.0%, a full percentage point above the Federal Reserve’s target.

Nominal personal income dipped 0.1% in February, which translated to a decline of 0.4% after adjusting for inflation (almost rounding to -0.5%). The softness is striking, but a review of the detail suggests that special factors played a role. Much of the weakness reflected a decline of 1.7% in dividend income, which followed a jump of 1.9% in January. Dividend payments in the prior two years followed the same pattern, leaving one to suspect that seasonal adjustment has gone awry. Government transfer payments also declined, with the miscellaneous category accounting for most of the drop. Medicaid payments also fell, marking the fifth consecutive decline, most likely driven by the tightening of provisions included in the One Big Beautiful Bill Act.

Nominal consumer expenditures rose 0.5%, a seemingly strong result, but the change amounted to only 0.1% in real terms. The small increase followed a flat reading in January and increases of only 0.1% in November and December. Consumers spent actively in the second and third quarters of last year, but they have become cautious recently. The data in hand suggest real outlay growth of approximately 1.0% in the first quarter, slower than the average pace of 3.0% in the middle of last year and 1.9% in 2025-Q4.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

260409C.jpg

260409D.jpg

- The energy component contributed to a high-side reading on the price index for personal consumption expenditures; the core component was firm as well.
- Consumer spending showed signs of slowing.

Personal Income, Consumption, and Prices: Higher Prices Dampen Real Gains

Sandy Batten

260409N1.jpg

260409C1.jpg

The third estimate of Q4 2025 GDP showed that real GDP growth slowed to 0.5% q/q saar versus 0.7% in the second estimate and 1.4% in the advance estimate. GDP had grown 4.4% in Q3. The more than one-month long shutdown of the federal government continued to have been a notable restraint on GDP growth in Q4, subtracting 1.0%-point from overall growth, the same as in the second estimate.

Revisions were very small across major expenditure categories. Growth of personal consumption expenditures was revised down slightly to 1.9% q/q saar from 2.0% previously. Nonresidential fixed investment increased 2.4%, up slightly from the 2.2% reported in the second estimate. The 0.5% q/q decline previously reported for residential investment was revised to a larger decline of 1.7%, subtracting 0.1%-point from overall growth versus 0.0%-point in the previous estimate. Inventories declined more than previously estimated, reducing their contribution to growth from 0.3%-point in the second estimate to 0.1%-point in today’s estimate.

260409O1.jpg

260409P1.jpg

There were slight downward revisions to the declines previously reported for both exports and imports, leaving net exports essentially unrevised. As already noted, a 16.6% q/q saar plunge in federal government spending (revised down slightly from -16.7%) accounted for most of the weakness in Q4. This included a 24.3% q/q collapse in nondefense spending, the second largest quarterly decline in nearly forty years. By contrast, state and local government spending increased 1.5%, revised up from 1.2% in the previous estimate.

Private domestic demand growth (final sales to private domestic purchasers, a favored gauge of demand by the Federal Reserve) was revised slower to 1.8% q/q saar in Q4 from 1.9% in the second estimate and 2.4% in the advance report. However, even the revised pace of growth is respectable and close to the economy’s potential growth rate.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

260409Q1.jpg

260409S1.jpg

- Q4 GDP growth revised to 0.5% q/q saar from 0.7% in the first revision and 1.4% in the advance report.
- The shutdown of the federal government still played a critical role in the slowdown, subtracting 1.0%-point from Q4 growth.
- Domestic demand slowed further with final sales to private domestic purchasers revised down to 1.8% from 1.9% in the first revision and 2.4% in the advance report.

U.S. Q4 2025 Real GDP Growth Revised Slower

260409E.jpg

Germany’s industrial production slipped in February, driven lower by dropping output of consumer goods. Sequential growth rates over 12 months, six months, and three months show a confusing array of patterns, except for intermediate goods, where annualized growth rates for output sequentially weaken and show declines on each horizon. All German sector growth rates for the quarter-to-date are showing declines, and the growth rankings by sector are below 50% across the broad, indicating below median performance across German sectors.  It’s a very unimpressive report.

Real manufacturing orders rose modestly in February against the backdrop of a very sharp drop in January. Real manufacturing sales have been erratic.

German output and industrial gauges, ranked on annual sales growth against historic norms, have been very weak. Only real orders post a standing above 50%, which represents the median.
 
France, Spain, Portugal, Sweden, and Norway provide some perspective on European growth. The northern European non-EMU member countries are much stronger than the EMU reporters, two of which have standings below their median levels (rankings below 50).

260409.jpg

Germany

German IP Is Weak in February

Kathleen Stephansen, CBE

260408A0.jpg

260408B0.jpg

Mortgage applications declined 0.8% w/w (-5.6% y/y) in the week ending April 3. The weekly decline eased relative to the prior three weeks, when mortgage applications dropped by 10.4% w/w (+14.2% y/y) in the week ending March 27, and by 10.5% and 10.9% in the March 20 and 13 weeks, respectively, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house rose 1.1% w/w (-6.7% y/y) in the April 3 week, after declining 2.6% w/w (+0.8% y/y) in the week ending March 27.  Applications for loan refinancing dropped by a smaller 2.8% w/w (-4.3% y/y) in the latest week, following weekly declines of 17.3% (+33.2% y/y) in the March 27 week, 14.6% in the March 20 week, and of 18.5% in the week ending March 13.

The effective interest rate on a 30-year fixed-rate loan declined 8bps to 6.68% in the week ending April 3 from 6.76% in the week ending March 27 and after having risen by 52bps since the February 27 week. The rate on 15-year fixed-rate mortgages rose 1bp to 6.09% in the latest week from 6.08% in the prior week. The 30-year Jumbo rate declined 6bps to 6.65% in the week ending April 3 from 6.71% in the March 27 week. The rate on a 5-year ARM eased 3bps to 5.85% in the latest week from 5.88% in the week ending March 27.

The share of applications for refinancing an existing loan declined to 44.3% of total applications in the week of April 3, from 45.3% in the March 27 week. The adjustable-rate mortgage (ARM) share of activity rose to 8.6% in the week ending April 3 from 8.0% in the week ending March 27.

The average size of a mortgage loan edged up 0.2% w/w (-9.1% y/y) to $390,100 in the week ending April 3, after declining 1.3% w/w (-1.9% y/y) to $389,200 in the week ending March 27. The average size of a purchase loan edged down 0.3% w/w (-0.9% y/y) to $448,100 in the latest week, following a decline of 0.8% w/w (+0.4% y/y) to $449,400 in the March 27 week. The average size of a loan to refinance a mortgage edged up 0.1% w/w (-20.7% y/y) to $317,000 in the week ending April 3 after declining 5.5% w/w (+0.3% y/y) to $316,600 in the March 27 week. From the week ending February 27 to the week ending March 27, the average size of a loan to refinance a mortgage had declined 21.8%.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Signs of stabilization in mortgage applications emerged in the latest week.
- Applications for loans to purchase posted a small increase, while applications for loan refinancing posted a small decline in the latest week.
- Interest rate on 30-year fixed-rate loans eased 8bps to 6.68%. 
- Average loan size edged up.

Economy in Brief

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